Yesterday’s trade saw USD/CAD within the range of 1.2310-1.2421. The daily high has also been the highest level since April 22nd 2009. The pair closed at 1.2381, gaining 0.32% on a daily basis.
At 8:53 GMT today USD/CAD was down 0.07% for the day to trade at 1.2372. The pair touched a daily low at 1.2361 during early Asian trade.
Fundamentals
United States
Manufacturing PMI – preliminary data
Manufacturing activity in the United States was probably little changed in January, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 54.0. In December the final seasonally adjusted PMI stood at 53.9, which has been the lowest reading since January 2014, when the indicator was reported at a final 53.7. In December the sub-gauge of output rose at the lowest pace in 11 months, while new business growth remained solid.
According to Markits statement: ”Levels of new work continued to increase in December and the rate of expansion picked up slightly from the 10-month low recorded during November. Meanwhile, new export orders returned to growth at the end of 2014, but the upturn was only moderate and weaker than that seen for overall new orders.”
”Manufacturing payroll numbers rose for the eighteenth successive month in December. However, the rate of job creation moderated to its least marked since July. Some survey respondents pointed to more cautious staff hiring policies at their plants amid signs of a reduced squeeze on operating capacity.”
Values above the key level of 50.0 indicate optimism (expanding activity). Higher-than-expected PMI readings would certainly support the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.
Existing home sales
The index of existing home sales in the United States probably gained 2.6% to a level of 5.06 million in December compared to a month earlier. In November compared to October existing home sales dropped 6.1% to 4.93 million, or the lowest level since May 2014, when sales amounted to 4.91 million homes.
The sample of data encompasses condos, co-ops and single-family houses.
Statistical data on existing home sales is often used along with statistical figures regarding the new home sales and pending home sales, with the major objective being to draw a conclusion how nation’s housing sector is performing, regardless of interest rates. The most active house-purchasing period in the United States is usually between the months of March through June. Therefore, in case statistical data revealed a sudden drop in the number of homes sold rather than an improvement during this period, this would be considered as a signal of weakness in the country’s housing market.
The report on existing home sales usually does not cause a real direct impact on US economy. Actually, this effect appears to be limited, due to the fact that nothing is produced with the mere sale of an existing home. In terms of economic activity, the sale of an existing house may be related only to interior design and purchases of new furniture.
In case the index increased more than anticipated, this would have a bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 15:00 GMT.
Canada
Consumer inflation
The annualized consumer inflation in Canada probably decelerated to 1.5% in December, according to market expectations, from 2.0% in the prior month. If so, this would be the lowest annual rate of inflation since March 2014, when it was reported at 1.5%. Novembers rate was influenced by a 5.9% drop in prices of gasoline, as the latter reached lows unseen since early 2011.
Transportation costs decreased 0.2% during the 12 months to November, after a 1.1% gain in October. This decline was almost entirely attributable to lower gasoline prices. Consumers in the country paid more for passenger vehicles (a 1.3% annual increase) and shelter (a 2.3% gain year-on-year). Prices of natural gas rose at an annualized rate of 14.7% in November, while food prices were up 3.1%, according to the report by the Statistics Canada.
In monthly terms, the Consumer Price Index (CPI) probably fell 0.6% in December, after another 0.4% drop in November.
Key categories in Canadian CPI basket are Shelter (accounting for 27.5% of the total weight) and Transportation (19.3%). Other categories include Food (with a 16.1% share), Household Operations, Furnishings and Equipment (11.8%), Recreation, Education and Reading (11.8%), Clothing and Footwear (5.7%), Health and Personal Care (5%), while Alcoholic Beverages and Tobacco Products comprise the remaining 3%.
Bank of Canadas (BoC) annualized Core CPI, which excludes prices of fruits, vegetables, gasoline, fuel oil, natural gas, mortgages, intercity transportation, and tobacco products, probably rose 2.2% in December. In November the annualized core inflation was reported at 2.1%, while in October – at 2.3%. The latter has been the highest annual rate of core inflation since February 2012, when it was registered at 2.3%. This is the key measure of inflation, on which the central bank bases its decisions regarding monetary policy. In case the Core CPI accelerated more than projected, but still remained within BoC inflation target range (1-3%), this would support demand for the Canadian dollar. The official CPI report by the Statistics Canada is due out at 13:30 GMT.
Retail sales
Retail sales in Canada probably dropped 0.2% in November on a monthly basis, according to the median forecast by experts, following a flat performance in October. Retail sales, excluding sales of automobiles, probably ticked up 0.1% in November compared to October, after a 0.2% gain in the preceding month. Large-ticket purchases are excluded due to their high volatility, which could influence the general trend. In case retail sales dropped more than anticipated, this would lead to a sell-off for the Canadian dollar. Statistics Canada is to release the official report at 13:30 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2371. In case USD/CAD manages to breach the first resistance level at 1.2431, it will probably continue up to test 1.2482. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2542.
If USD/CAD manages to breach the first key support at 1.2320, it will probably continue to slide and test 1.2260. With this second key support broken, the movement to the downside will probably continue to 1.2209.
The mid-Pivot levels for today are as follows: M1 – 1.2235, M2 – 1.2290, M3 – 1.2346, M4 – 1.2401, M5 – 1.2457, M6 – 1.2512.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
